Tenants Sue Kushner Companies Claiming Rent Rule Violations

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A lawsuit against the Kushner Companies was filed in New York State Supreme Court in Brooklyn on Tuesday on behalf of nine tenants, but it concludes that more than 100 former and current tenants could have similar claims.CreditCreditJustin Lane/European Pressphoto Agency

A group of New York City tenants has sued the Kushner Companies, the family real estate firm of Jared Kushner, President Trump’s son-in-law and White House adviser, accusing the company of systematically violating the state’s rent regulations.

Claims could grow to more than $1 million in rent overcharges in a single apartment building if the company is found liable.

The lawsuit, filed in the New York State Supreme Court in Brooklyn on Tuesday, was on behalf of nine tenants, but it concludes that more than 100 former and current tenants could have similar claims. The complaint is seeking class-action status.

The nonprofit group that researched the building, Housing Rights Initiative, said it had found similar irregularities in more than 50 other Kushner Companies apartment buildings across New York City and is studying potential future litigation related to those properties.

A Kushner Companies spokesman said the firm was reviewing the lawsuit.

The complaint stems from the Kushner Companies’ 2014 purchase of a 48-unit apartment building at 89 Hicks Street in Brooklyn Heights, one of the city’s most affluent neighborhoods.

The building had previously been owned by the Watch Tower Bible and Tract Society, then by Brooklyn Law School. Because those owners did not rent the apartments to the public, units previously covered by the state’s rent stabilization laws were temporarily exempt.

Under New York State law, any building of six apartments or more built before 1974, or new buildings that have received certain types of property tax breaks, must charge rents that conform with the state’s rent stabilization laws. Landlords must register the rents annually and can increase the rents only based on formulas set by the city and the state.

The suit claims that Kushner Companies failed to provide rent-stabilized leases to tenants as required, once it had purchased the building and the temporary exemption ended. The company’s failure to offer such leases was “willful and designed to remove the apartments” from the protections of the rent laws, according to the complaint, filed by the law firm Newman Ferrara in Manhattan.

The building is in the heart of Brooklyn Heights, a short walk from the historic Brooklyn Bridge and several amenities along the water, including basketball courts, roller-skating rinks, jogging and biking paths, and sweeping views of Lower Manhattan.

The suit came after a monthlong investigation by Housing Rights Initiative, which investigates rent fraud in rent-regulated buildings.

“I’ve seen instances where the landlord registered the units’ rents at an improper amount, but I’ve never seen a landlord just deregulate an entire building,” said Aaron Carr, the group’s executive director. “I’ve investigated hundreds of buildings, but never seen a scheme as egregious and systematic as this one.”

Kushner Companies has been registering a handful of units in the building as rent-stabilized, which Mr. Carr said showed that the firm’s omissions were unlikely to have been an accident, a pattern he said his group has seen in other Kushner properties.

“Rent overcharges or rent fraud is part of a systematic business model,” he added. “When you see irregularities in a few buildings, that mostly likely means there are irregularities in all of their buildings.”

In preparation for his new White House role, Mr. Kushner began divesting a small portion of his stake in the family real estate empire. But he has retained ownership in the majority of the multibillion-dollar business, which includes more than 20,000 apartments and nearly 14 million square feet of office space around the country, mainly in New York and New Jersey.

The stake held by Mr. Kushner and his wife, Ivanka Trump, in the family business and other investments is worth as much as $761 million to the couple.

In the case of a one-bedroom apartment in the Brooklyn building, Mr. Carr said that Kushner Companies was charging the tenant about $2,500 a month, when he estimated the legal rent should more properly have been about $1,100 a month, based on the permissible increases since the last time the unit’s rent was regulated.

As a result, he estimated that the tenant was overcharged by about $17,000 in a single year.

A version of this article appears in print on , on Page B4 of the New York edition with the headline: Tenants Sue Kushner Firm Over Rents. Order Reprints | Today’s Paper | Subscribe